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Which Is the Better AI Stock to Buy Now: Microsoft vs. Google

In the tech landscape, the launch of OpenAI’s ChatGPT in 2022 sparked a keen interest among investors in all things related to AI. Microsoft and Alphabet swiftly rose to prominence as leaders in the AI realm, with Microsoft maintaining a close partnership with OpenAI. Soon after ChatGPT’s debut, Alphabet introduced its response in the form of Bard.

Fast forward nearly a year, and both Microsoft and Alphabet recently unveiled their earnings for the October-to-December quarter. Interestingly, despite robust performance, the market responded by selling off both stocks, raising questions about whether the AI stock hype might be overplayed.

Microsoft, now holding the title of the world’s most valuable company, reported an impressive 18% YoY revenue increase, reaching $62 billion. Notably, its intelligent cloud segment, marked by a 30% growth in Azure revenue, stood out. On the flip side, Alphabet’s Q4 revenue hit $86.3 billion, a 13% YoY rise. However, its ad revenue fell slightly below expectations, prompting a 6% drop in stock value.

When comparing the two in the AI domain, Microsoft appears to have the upper hand. Its integration of AI-powered Copilot across various products and substantial revenue growth in Azure attributed to AI showcase a well-prepared stance for the AI revolution. In contrast, Alphabet, while no stranger to AI, seems to lack the strategy and applications needed to fully leverage generative AI.

Despite Microsoft’s stock being pricier than Alphabet’s, it emerges as the more promising AI investment due to its comprehensive approach to new technology and strategic alliances, especially with OpenAI.

For those considering potential investments, Microsoft secured a place on Motley Fool’s list of top ten stocks for investors, with nine others that might be flying under the radar.

In the dynamic world of AI, Microsoft stands out as the more promising player, strategically positioning itself for the AI revolution. Despite the difference in stock prices, the long-term prospects favor Microsoft, making it the preferred AI stock to consider.

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